Flash
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Posts posted by Flash
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This why top down stats on unemployment, house prices or whatever can be misleading.
The strength of local economies in the UK will vary sharply in the downturn. Media reports during the recession of the early 90's talked at length about "a North-South divide" in terms of prosperity. It was in fact more complicated than that and there were great disparities in fortunes on an almost town-by-town basis across the UK.
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Certainly an interesting read. It makes me laugh that these experts queue up explain why homes are more affortable now than in previous years. However, this quote tells you all you need to know.
"According to Daithi Downey, policy analyst with Focus Ireland, one in five parents underwrite their children's attempts at house purchases to the value of over €75,000."
Says it all really. Talk about bubble fueling the bubble. I guess you can't save people from themselves.
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The banks seem undetered in flooding the country with cheap money. ECB raising rates is a real contender of ending the party but those guys are as slow as molasses.
ECB members are spending a lot of time with the media at the moment warning of the need for higher rates. This is what central bankers should do - i.e. telegraph to the markets a change in fiscal policy well before implementation.
So, with inflation in Euroland rearing its head, rates will be heading up, and I would say by at least .75% over the next year. I wonder what effect this will have on a mortgagee who is maxed out at 3.5% ?
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Considering that the average ANNUAL wage in Turkey is just under €6,000, I think it highly likely that that property is overpriced cr@p targeted at clueless foreigners thinking in Paddy prices: "Wow, €90,000! You couldn't get a shed in Dublin for that amount! What a bargain!"...
Agreed. It is likely to be all the overpriced stuff. You never hear ads for areas where property is generally better value, like Germany or Japan - Hmm...funny that. Perhaps we will in a few years time, when the real money has already been made.
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Unemployment down?
The UK economy is obviously going gangbusters. Perhaps the MPC should raise interest rates to cool it off a little.
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Never offer financial advice unless asked for and even then exercise caution.
Most people only ask for advice as a way of reinforcing their own decisions, if you go counter to their ideas and they follow your advice, and things then go wrong, who do they blame?
Yup, you.
Absolutely right. I only ever give one-on-one investment advice to immediate family and even then I am very cautious.
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On Dublin’s Newstalk Radio, the commercial breaks are flooded with property investment ads: “Invest in….Spain….Turkey….Bulgaria….Shanghai….Manchester (yep, Manchester!
)”. It’s becoming an assault.There are no caveats or warnings, as you would expect if you were being sold other investments and I am pretty sure these agents are not regulated.
They talk of “guaranteed rental yield” and “projections for capital growth of x%” etc. They even quote prices, such as: “Turkey starting at JUST €90,000”. I can’t remember the exact price to be fair, and anyway it doesn’t matter - how am I supposed to know if €90k is good value for that area of Turkey? It might be a total rip-off.
It all reinforces to me that these commercials are aimed at pretty unsophisticated people, and that worries me. It worries me a lot. Most people are just ordinary folk, trying to get by, holding down a job, whilst raising a family and they are sucked in by soundbytes like “secure YOUR future”. Remember, this is not about just putting a few thousand in. This is serious money, much of which will be borrowed. People could be ruined if it turns sour.
Some neighbours of mine have bought property in Turkey very recently. I admit I don’t know the financial details, but I am worried for them as they are a lovely family and I would hate it to go wrong them.
Am I worrying too much? Maybe I should say “Stuff it. Let people make their own mistakes”. But I guess I’m not that sort of a person.
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Whenever we meet, the topic of house prices comes up, and they always go on about how much money they've made.
Until you've banked the money you've made nothing. Remember the dot.com bubble? Well this is bigger.
I've got one of these dinner parties coming up. Hmm...I must remember to bring my baseball bat and dustbin lid. Seriously though, these days I try to manoeuvere the conversation on to something else.
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Take a look at the share price performance of debt management companies, Debt Free Direct (DFD) and Accuma (ACG).
DFD up 100% in the last year and ACG up the same in the last 6 months.
Now that's what I call Debt Financed Growth
By the way, ACG results 18th October.
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pdg and Wrigglesworth went to sea
In a beautiful pea-green boat:
said pdg "It's smashing,
that house prices are crashing.."
and Wrigglesworth went for his throat.
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Could someone please specify something on BBC1 that is worthy of this prodigious spending.
The News?
(gets coat)
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I'm going to stick my name down as a fan of the BBC. It's not perfect, there is undoubtably a lot of crap on, but before you get carried away critisizing it & calling for it's privatisation. All I can say is, look at ITV News, in fact look at ITV. For that matter look at Sky 1, remove all the US programs they buy in & consider what is left.
Bear in mind while you think about it, the BBC is often credited for keeping the rest of British TV highbrow.
Thanks GM. I was beginning to feel like a troll!!
Agreed. There is a lot of crap, but it beats the opposition.
Those who value quality drama, news, sport, documentaries etc can all get their fill from the better channels available by satellite (I do).
I think we'll have to agree to disagree.
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Are you talking about the World Service?
That is funded by the home office, not the licence fee.
BBC TV news is awful, Channel 4 news is far superior.
BBC TV programmes are available around the world, not just the World Service.
Incidently (and a genuine question), who pays for the web site? That is the world's best in my opinion. And it does a lot to promote Britain around the world.
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Oh dear. The UK's gift.
If that's what it is then forget the economy. We're really going down hill.
The sooner they privatise the BBC the better. I rarely watch. In fact I rarely watch telly apart from satelight news. I rent my programs and movies from the Internet. That's the way of the future and the BBC know it.
If they really are asking for that much then its payback time for the fiasco of the David Kelly debacle.
There are many people on this earth that rely on the BBC to provide them with the only source of reliable, unbiased and factual information. I know it has its problems and it is right that we criticise it. What would privatisation do for it?
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Its well worth it to watch eastenders and repeats.
I wonder how much the BBC spends on Eastenders per year. I guess it doesn't matter how much as bosses at the Beeb will point to the ratings to justify whatever they spend on it.
I actually think that on the whole the BBC does a great job. It is the UK's gift to the world.
However, Eastenders is utter tripe that serves only to dumb down the IQ of the average viewer. That is not appropriate for a public service broadcaster.
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Flash, I have exactly the same problem, I call it 'house envy' and it drives me up the frickin' wall :angry:
You have my sympathy.
Although I have to say, 'baby envy' is even worse!
Thanks ICTOA. I could understand 'house envy' if their home was better or bigger, but they are not. The difference is, we don't have a huge debt against ours.
Ah 'baby envy'....resistance is futile in my experience!
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My wife is constantly getting hassle from her so-called friends
“Why haven’t you bought yet?” and “Look how much house prices have gone up!” and my favourite “I don’t think I could handle renting” – as if renting is somehow akin living in squalor. The fact is, we rent a nice 4 bed place at much less than a mortgage would cost and we have capital invested which earning us a nice return. But they can’t see that. It’s as if property is the only investment around worth making.
I think these women actually feel sorry for my wife and that it is MY fault for being so stubborn. One actually said to her “Oh dear, can’t you talk him around?” That really wound me up. Our financial business is exactly that - OUR business. I don’t criticize their financial decisions. The problem is this female peer pressure is incredibly powerful and it is actually causing problems for us now.
I wish we could answer back with evidence of house price falls. But we can’t (at least not yet), we are in Ireland!!!
Please can I have solace and kind words to cheer me up.
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By the way, walking around Dublin 2, it never ceases to amaze me just how many "To Let" signs there are. Those Georgian houses (Merrion Square area) must be worth a fortune and so many are empty.
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So isn't it a matter of not just running out of people unable to afford the credit (can't be many left) but the simple matter of running out of people?
One of the most popular arguments of the property bull in Ireland. Is "Demographics....70,000 people flooding into the country every year etc...etc". But as you quite rightly say, how many can afford £500k for a flat?
That is probably why rents remain low. Rents indicate the true housing demand as a tenant will always hunt around for the best price. Whereas house prices prices are driven north by speculators.
Many of the tenants from Eastern Europe are coming in the work on building sites, to build apartments for more Eastern European immigrants coming in to build apartments etc etc etc..
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lil ol' Dublin is now more expensive then London for residential property.
We have not yet turned the corner as they have in many areas of the UK.
The country is on the mother of all credit binges. And, all the time banks are throwing money at people it won't stop. The latest spurt in house prices is due to the widespread introduction of 100+% mortgages. People seem almost to rejoice at this development - as if the banks are being charitable. The fact is that they do this because they have to do this, to keep the party going. Well, come the end of the party, people will see exactly how charitable banks can be!!! This all has the feeling of a runway train now. It's completely out of control.
By the way, if you get a 100% mortgage can really call yourself a home owner?
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yes I agree, emigrate to Australia!! if you havent bought in Ireland by now, chances are it'll be a very long time before you will be able to. people arnt joking when they say 'prices wont fall in ireland'-- what they mean is that the normal market mechanism currently at work in Uk/Aus/USA will not be allowed to happened in Ireland. the most likely scenario IMHO is for an extremely slow, perhaps decades slow, unwinding of prices, accompanied by extremely low turnover. This stagnation scenario will be engineered (economic and politically incentivised) by those that run Ireland Inc. Rem ireland Inc is the size of a large Uk city, with the additional attribute of a ingrained collusive/collective mentally among the inhabitants. The long historical pattern of economic cleansing will repeat itself, but this time it'll be lack of affordable property/land to buy rather than a job that will be the cause. The current 10-20yr old cohort will either (a) live in their parents properties, (
rent, © emigrate. The owners and renters in Irish society for the next 20yrs has been largely decided right now today.This is the 'other' outcome, and one not likely (nor even debated) in the UK or elsewhere. It's a peculiarly Irish thing because of our peculiar attachment to land/property.
I agree that the government may attempt to "fix" the market, but I believe it will only have limited success. Ireland's economic boom has been built on foreign investment. It's not like the country is floating on oil or anything. If land prices are artificially held high in Ireland when they are falling in other countries, foreign investors may well give up and look elsewhere. Ireland is already looking uncompetitive in many areas of its economy already without making things any worse.
I think I read that construction accounts for 25% of GDP and 20% of employment in Ireland. It is a case of the boom fueling the boom. You cannot unwind that easily. Where will all those workers go?
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Greed could well be the trigger if one were needed.
Good point. Perhaps I should have called it the Greed Premium!
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I have been lurking for a while and am making my first post.
This is the time (in my view) that the housing market is at its most interesting. A long upward trend has come to an end and a new one is about to start. The question is: In what direction? Down, flat or even up again? It seems that even the most optimistic VI projections are expecting flat prices or slightly down in the medium term, especially if adjusted for inflation.
In my view, prices are at this very high level, with rental yields abysmally low because the price has what I call the “Growth Premium” factored in. This is the extra price a homebuyer or investor is prepared to pay because “prices are going up stoopid!!”
But now the boom is over. And it’s sure been a wild ride with houses in many areas tripling in value and more over the last decade. Just ten years ago, if I’d slipped into conversation with a drinking buddy that I had a mortgage of around £100k, he’d probably cough up his pint. Nowadays, he’d probably call me a “lucky sod” for having such a small debt burden. It amazes me how things have changed, in such a short period of time - society has become anesthetized to borrowing.
When thinking about house prices, it is worth considering how we value growth shares. When valuing a growth stock investors are prepared place a higher value on the company’s earning when they are growing substantially. Hence growth stocks have higher Price/Earning Ratios. However, if the company goes ex-growth (and even if the earnings remain strong), the PER must fall to reflect the change in circumstances. So the share price falls as the “Growth Premium” is deducted.
I believe we will see the same happen with house prices as home buyers/investors come to realize that they can bide their time. They do not have to chase a market that will leave them behind if they wait.
So the next question is: “How big is the GP?” Any thoughts?
Flash
Ireland - Housing / Savings / Debt
in House prices and the economy
Posted
I'm pretty sure that a lot of this money will find its way into the housing market.
Maybe, it could cause the last spurt in growth before it all finally stops - much in the way that the changing of the MIRAS rules in the UK pushed prices to the peak in the late 80's.
Most people in Ireland will simply not accept that anything is wrong whatsoever with the housing market. I am convinced that there is only one thing that will change this view - a hike in interest rates. And that is coming.